8 ms·

Study: Renters in high-rent cities are as NIMBY as homeowners

55 points by tysonzni 9y ago

tysonzni 9y ago
Link to paper: http://mhankinson.com/assets/jmpWeb.pdf http://mhankinson.com/assets/jmpWeb.pdf
wnissen 9y ago
Renters and pro-growth, urban-minded owners would seem to constitute a majority in many of the highest cost parts of California. And yet my town recently passed a milestone of sorts: the principle and interest to buy the median home consume 100% of median household income, before taxes, food, or any other expenses. This study appears to explain how the current situation has come about.
- michaelchisari 9y ago
  California seems to have a (huge) added problem of speculative real-estate investment. The median price on a home will skyrocket if there's a significant amount of people who buy up properties for investment and not for use.
  - mistursinistur 9y ago
    What's the evidence that speculation is driving price increases in California?
  - eherot 9y ago
    People buy properties as "investments" when they see prices rising constantly, not the other way around.
    - michaelchisari 9y ago
      Sure, but it exacerbates the problem of rising rents.
- pjschlic 9y ago
  This sounded interesting, do you have a link to this study? I was going to try to do this analysis for where I live, and after looking up median income for the area, I realized I wasn't sure what you meant by 'down payment and interest consume 100% of income.' Did you mean a 20% downpayment and interest on a loan would consume one year's worth of income... because that actually seems pretty cheap if a median income in my area was enough more than the 20% down payment for a median home in my area that it could also cover the interest for year... Had you meant 3% + 1% PMI + 4% interest for an FHA consume 100% on median, because that definitely implies either high prices on houses or low median incomes.
  - wnissen 9y ago
    It's not really a study, just the slightly more than back of the envelope calculation that you're sketching out. The census records median household income, check for a typical rate, and in the Bay Area at least, you get a huge fraction.
- opportune 9y ago
  That's a weird comparison. Not every household makes enough money to afford a home. I don't think home ownership is a universal human right so I don't really see the problem with this. The median household shouldn't be buying a median priced new car either
  - maxsilver 9y ago
    > Not every household makes enough money to afford a home. I don't think home ownership is a universal human right so I don't really see the problem with this. I think this is a sad step backwards in the development of human society. It's downright dystopian. The average household should be able to own an average home (or condo/apartment, for cities). For the same reason that the average person should be able to own a toothbrush, cell phone, some clothing, and so on. This idea that it's just 100% OK that no real person could/should ever afford any housing, and every poor-middle-class person should always be beholden to renting from a private for-profit corporation forever is incredibly destructive to public finances and the ability of regular people to generate any meaningful savings or financial stability.
patio11 9y ago
Isn't the causational arrow in the other direction? If your polity didn't prefer to have high prices, you wouldn't have high prices. If you have high prices, of course your polity prefers high prices.
- closeparen 9y ago
  It’s surprising that renters would ever prefer high prices.
  - tropo 9y ago
    Prospective renters prefer low prices. Existing renters don't care, but they like the things that cause high prices. The rent will not change for the life of the lease. Under rent control, the renter won't be much affected ever.
- hawkice 9y ago
  I think the surprising part is the lack of a difference between renters and homeowners. You'd expect the policy to be the average of the two groups' preferences, but the fact they don't form two clusters in conflict is... Odd.
Tiktaalik 9y ago
This is not at all surprising when one considers that most of the time housing intensification is focused around low income areas, and so new market priced housing goes hand in hand with gentrification and displacement of low income residents. Why wouldn't existing renters be opposed to this? This wouldn't be an issue at all if municipal governments instead intensified housing in the most expensive areas, but homeowners there are rich and capable of superior organization. For that reason you basically never see any attempt to upzone wealthy areas with low density detached housing. The only available easy out for municipal governments is to rezone industrial land to residential and upzone it before anyone lives there.
- michaelchisari 9y ago
  I've always thought that cities needed to focus on redevelopment as a much broader, city-wide strategy. Instead of following trends of what the next "up and coming" neighborhood is, actually revitalize all areas of the city. Right now, Chicago has maybe 6 neighborhoods that people from outside of the city consider moving to. This puts a ton of pressure on the rents in those few neighborhoods and their surrounding areas. But if the whole city had proper services, transportation, properly maintained housing units and relatively low crime, that should ease the demand on those few neighborhoods. Instead, people just move into one area until it's too expensive to live there, then get pushed into another area until it's too expensive to live there, and so on and so forth.
  - seanmcdirmid 9y ago
    This doesn't work in practice. Places like Switzerland have all around good city strategies, yet finding a place to live is still super hard and super expensive. You can't even run off to the ghetto for cheaper options.
    - michaelchisari 9y ago
      There are always geographic considerations that limit market availability, of course.
tropo 9y ago
This is due to rent control. Renters become more like homeowners when there is rent control. They essentially have an investment to protect. Their immediate financial situation (rent being due, much like a mortgage payment or property tax) is unaffected by neighborhood changes. The enjoyment of their neighborhood is affected though, and they seek to maximize this. The difference between the controlled rent and the market rent is in some sense an income that the renter receives from the landlord. The higher the market rate rent, the greater this income will be. Long leases may have a similar effect; this is voluntary rent control.
- Gibbon1 9y ago
  Nope not due to rent control. It's due to things like it it taking me 45 minutes today to drive from my apartment to the bay bridge. What I find annoying is the same people that are against rent control and zoning are also utterly against government providing basic public services such as buses, subways, and mass transit. So developers build more office space, businesses add jobs, people get packed in tighter with no increase in transportation services to match. You don't need to be a renter or owner for that to rankle. And at least as a owner in theory the value of you asset is going up. As a renter there is no upside at all.
  - tropo 9y ago
    Why would a renter in the city care about your commute? The renter's upside to NIMBY behavior is that the neighborhood is more appealing. This is obviously an upside for the renter, as long as there is no way for the landlord to take advantage of the increased value. The owner only gains if they sell the property or find some way to cause a rent control reset.
  - cycrutchfield 9y ago
    >What I find annoying is the same people that are against rent control and zoning are also utterly against government providing basic public services such as buses, subways, and mass transit. Nice straw man, but this is not a commonly held stance aside from the extreme Libertarian crowd.
  - 9y ago
saudioger 9y ago
Of course they are, they don't want to get priced out of their neighborhood by gentrification. You can live in an undesirable area for 20 years and have somewhat stable rent, but once the area gentrifies because of a crunch on housing availability, a developer's going to start buying properties, slapping on a coat of paint, and doubling the rent. It's happening _incredibly_ quickly in Boston's neighborhoods one by one. It happened to The South End, Southie, Jamaica Plain, Somerville (not technically Boston proper but 10 years ago they used to call it Slummerville), and now Dorchester and Roxbury are gentrifying. I own a single-family house in a previously undesirable area, and on 2 separate occasions I've had developers come to my door cold trying to buy my single-family house to tear it down and develop on the property.
- wbl 9y ago
  Solution: more development in rich neighborhoods
  - saudioger 9y ago
    Which isn't going to happen if the residents have a say because the rich are the worst offenders when it comes to NIMBYism. Multiple residents of the North End of Boston went to a public meeting to complain about the addition of handicapped ramps on brick sidewalks because it would damage the historic authenticity of the neighborhood. The Cape of Massachusetts couldn't get an offshore windfarm because locals complained about how it would negatively impact the view.
    - eli_gottlieb 9y ago
      > Which isn't going to happen if the residents have a say because the rich are the worst offenders when it comes to NIMBYism. Ok, then we take away their say and put zoning decisions at the state or regional level. Fuck rich NIMBY's, I want a place to live.
- georgeecollins 9y ago
  But NIMBYism holds back the development that might lower rent. I understand why property owners don't want development, it can undermine the value of their property. But why don't renters want development?
sxates 9y ago
I live in Oakland and am a member of a few groups that give me a look outside my usual wealthy tech bubble to the sentiments of the lower income folks here. There is HUGE resistance to new development in Oakland among the very people who are being priced out. But unlike property owners who tend to resist new development because they worry about supply pushing prices down, many of these people seem to see an opposite correlation: that new development means higher rents, which displace them and their communities. I think this is simply a misunderstanding of how development works. They see rents going up, and new buildings going up, and assume that the new buildings are the cause of the increase, not a response to the increase. They think we need to build more below-market rate units, because the luxury ones raise average rental prices. But really, the shortages which create high prices are what create the business case for building expensive luxury condos. If rents weren't already high, these buildings wouldn't be built. If the demand is there but not the supply, everyone at the wealthy end of the spectrum will take all of the supply, leaving the poorer ends out of a home. So the more market rate units we have, the more lower end units that are available. Seems simple to me, but a lot of people seem to get this wrong. They have this idea that there are a bunch of wealthy and greedy developers out to get them and their precious neighborhoods. The buildings these developers start have a shockingly high rate of spontaneous combustion in Oakland, right when framing is complete. I wonder if the property owner interests only encourage these mis-perceptions since they serve their interests.
- riahi 9y ago
  Is there a net increase in housing stock, or are cheaper units being replaced by higher priced luxury units?
  - aardvark291 9y ago
    I think there must be a net increase. In Oakland, parking lots are being replaced with mid-rise apartment complexes. There is an impressive amount of construction under way at the moment.
- Spooky23 9y ago
  The crowd tends to speak the truth. People aren’t dumb. The type of construction common today isn’t in the interest of people who own single or <4 unit property or people who rent. Developers are absolutely greedy and generally have no interest in the impacts surrounding their work. For most, their job is to gather capital, do a deal and gtfo.
tysonzni 9y ago
tldr; At the macro (city-wide) level, renters tend to be more supportive of development. But wrt development in their own neighborhood, renters in high-rent cities exhibit NIMBY-ism towards market-rate housing (associated with gentrification). Interesting that they don't mind more affordable housing, which suggests that their concern is not simply economic but rather involving risk-aversion, fear of lesser quality of life, and gentrification.

55 points by tysonzni 9y ago

Link to paper: http://mhankinson.com/assets/jmpWeb.pdf http://mhankinson.com/assets/jmpWeb.pdf

Renters and pro-growth, urban-minded owners would seem to constitute a majority in many of the highest cost parts of California. And yet my town recently passed a milestone of sorts: the principle and interest to buy the median home consume 100% of median household income, before taxes, food, or any other expenses. This study appears to explain how the current situation has come about.

michaelchisari 9y ago
California seems to have a (huge) added problem of speculative real-estate investment. The median price on a home will skyrocket if there's a significant amount of people who buy up properties for investment and not for use.
- mistursinistur 9y ago
  What's the evidence that speculation is driving price increases in California?
- eherot 9y ago
  People buy properties as "investments" when they see prices rising constantly, not the other way around.
  - michaelchisari 9y ago
    Sure, but it exacerbates the problem of rising rents.
pjschlic 9y ago
This sounded interesting, do you have a link to this study? I was going to try to do this analysis for where I live, and after looking up median income for the area, I realized I wasn't sure what you meant by 'down payment and interest consume 100% of income.' Did you mean a 20% downpayment and interest on a loan would consume one year's worth of income... because that actually seems pretty cheap if a median income in my area was enough more than the 20% down payment for a median home in my area that it could also cover the interest for year... Had you meant 3% + 1% PMI + 4% interest for an FHA consume 100% on median, because that definitely implies either high prices on houses or low median incomes.
- wnissen 9y ago
  It's not really a study, just the slightly more than back of the envelope calculation that you're sketching out. The census records median household income, check for a typical rate, and in the Bay Area at least, you get a huge fraction.
opportune 9y ago
That's a weird comparison. Not every household makes enough money to afford a home. I don't think home ownership is a universal human right so I don't really see the problem with this. The median household shouldn't be buying a median priced new car either
- maxsilver 9y ago
  > Not every household makes enough money to afford a home. I don't think home ownership is a universal human right so I don't really see the problem with this. I think this is a sad step backwards in the development of human society. It's downright dystopian. The average household should be able to own an average home (or condo/apartment, for cities). For the same reason that the average person should be able to own a toothbrush, cell phone, some clothing, and so on. This idea that it's just 100% OK that no real person could/should ever afford any housing, and every poor-middle-class person should always be beholden to renting from a private for-profit corporation forever is incredibly destructive to public finances and the ability of regular people to generate any meaningful savings or financial stability.

patio11 9y ago

Isn't the causational arrow in the other direction? If your polity didn't prefer to have high prices, you wouldn't have high prices. If you have high prices, of course your polity prefers high prices.

closeparen 9y ago
It’s surprising that renters would ever prefer high prices.
- tropo 9y ago
  Prospective renters prefer low prices. Existing renters don't care, but they like the things that cause high prices. The rent will not change for the life of the lease. Under rent control, the renter won't be much affected ever.
hawkice 9y ago
I think the surprising part is the lack of a difference between renters and homeowners. You'd expect the policy to be the average of the two groups' preferences, but the fact they don't form two clusters in conflict is... Odd.

Tiktaalik 9y ago

This is not at all surprising when one considers that most of the time housing intensification is focused around low income areas, and so new market priced housing goes hand in hand with gentrification and displacement of low income residents. Why wouldn't existing renters be opposed to this? This wouldn't be an issue at all if municipal governments instead intensified housing in the most expensive areas, but homeowners there are rich and capable of superior organization. For that reason you basically never see any attempt to upzone wealthy areas with low density detached housing. The only available easy out for municipal governments is to rezone industrial land to residential and upzone it before anyone lives there.

michaelchisari 9y ago
I've always thought that cities needed to focus on redevelopment as a much broader, city-wide strategy. Instead of following trends of what the next "up and coming" neighborhood is, actually revitalize all areas of the city. Right now, Chicago has maybe 6 neighborhoods that people from outside of the city consider moving to. This puts a ton of pressure on the rents in those few neighborhoods and their surrounding areas. But if the whole city had proper services, transportation, properly maintained housing units and relatively low crime, that should ease the demand on those few neighborhoods. Instead, people just move into one area until it's too expensive to live there, then get pushed into another area until it's too expensive to live there, and so on and so forth.
- seanmcdirmid 9y ago
  This doesn't work in practice. Places like Switzerland have all around good city strategies, yet finding a place to live is still super hard and super expensive. You can't even run off to the ghetto for cheaper options.
  - michaelchisari 9y ago
    There are always geographic considerations that limit market availability, of course.

tropo 9y ago

This is due to rent control. Renters become more like homeowners when there is rent control. They essentially have an investment to protect. Their immediate financial situation (rent being due, much like a mortgage payment or property tax) is unaffected by neighborhood changes. The enjoyment of their neighborhood is affected though, and they seek to maximize this. The difference between the controlled rent and the market rent is in some sense an income that the renter receives from the landlord. The higher the market rate rent, the greater this income will be. Long leases may have a similar effect; this is voluntary rent control.

Gibbon1 9y ago
Nope not due to rent control. It's due to things like it it taking me 45 minutes today to drive from my apartment to the bay bridge. What I find annoying is the same people that are against rent control and zoning are also utterly against government providing basic public services such as buses, subways, and mass transit. So developers build more office space, businesses add jobs, people get packed in tighter with no increase in transportation services to match. You don't need to be a renter or owner for that to rankle. And at least as a owner in theory the value of you asset is going up. As a renter there is no upside at all.
- tropo 9y ago
  Why would a renter in the city care about your commute? The renter's upside to NIMBY behavior is that the neighborhood is more appealing. This is obviously an upside for the renter, as long as there is no way for the landlord to take advantage of the increased value. The owner only gains if they sell the property or find some way to cause a rent control reset.
- cycrutchfield 9y ago
  >What I find annoying is the same people that are against rent control and zoning are also utterly against government providing basic public services such as buses, subways, and mass transit. Nice straw man, but this is not a commonly held stance aside from the extreme Libertarian crowd.
- 9y ago

saudioger 9y ago

Of course they are, they don't want to get priced out of their neighborhood by gentrification. You can live in an undesirable area for 20 years and have somewhat stable rent, but once the area gentrifies because of a crunch on housing availability, a developer's going to start buying properties, slapping on a coat of paint, and doubling the rent. It's happening _incredibly_ quickly in Boston's neighborhoods one by one. It happened to The South End, Southie, Jamaica Plain, Somerville (not technically Boston proper but 10 years ago they used to call it Slummerville), and now Dorchester and Roxbury are gentrifying. I own a single-family house in a previously undesirable area, and on 2 separate occasions I've had developers come to my door cold trying to buy my single-family house to tear it down and develop on the property.

wbl 9y ago
Solution: more development in rich neighborhoods
- saudioger 9y ago
  Which isn't going to happen if the residents have a say because the rich are the worst offenders when it comes to NIMBYism. Multiple residents of the North End of Boston went to a public meeting to complain about the addition of handicapped ramps on brick sidewalks because it would damage the historic authenticity of the neighborhood. The Cape of Massachusetts couldn't get an offshore windfarm because locals complained about how it would negatively impact the view.
  - eli_gottlieb 9y ago
    > Which isn't going to happen if the residents have a say because the rich are the worst offenders when it comes to NIMBYism. Ok, then we take away their say and put zoning decisions at the state or regional level. Fuck rich NIMBY's, I want a place to live.
georgeecollins 9y ago
But NIMBYism holds back the development that might lower rent. I understand why property owners don't want development, it can undermine the value of their property. But why don't renters want development?

sxates 9y ago

I live in Oakland and am a member of a few groups that give me a look outside my usual wealthy tech bubble to the sentiments of the lower income folks here. There is HUGE resistance to new development in Oakland among the very people who are being priced out. But unlike property owners who tend to resist new development because they worry about supply pushing prices down, many of these people seem to see an opposite correlation: that new development means higher rents, which displace them and their communities. I think this is simply a misunderstanding of how development works. They see rents going up, and new buildings going up, and assume that the new buildings are the cause of the increase, not a response to the increase. They think we need to build more below-market rate units, because the luxury ones raise average rental prices. But really, the shortages which create high prices are what create the business case for building expensive luxury condos. If rents weren't already high, these buildings wouldn't be built. If the demand is there but not the supply, everyone at the wealthy end of the spectrum will take all of the supply, leaving the poorer ends out of a home. So the more market rate units we have, the more lower end units that are available. Seems simple to me, but a lot of people seem to get this wrong. They have this idea that there are a bunch of wealthy and greedy developers out to get them and their precious neighborhoods. The buildings these developers start have a shockingly high rate of spontaneous combustion in Oakland, right when framing is complete. I wonder if the property owner interests only encourage these mis-perceptions since they serve their interests.

riahi 9y ago
Is there a net increase in housing stock, or are cheaper units being replaced by higher priced luxury units?
- aardvark291 9y ago
  I think there must be a net increase. In Oakland, parking lots are being replaced with mid-rise apartment complexes. There is an impressive amount of construction under way at the moment.
Spooky23 9y ago
The crowd tends to speak the truth. People aren’t dumb. The type of construction common today isn’t in the interest of people who own single or <4 unit property or people who rent. Developers are absolutely greedy and generally have no interest in the impacts surrounding their work. For most, their job is to gather capital, do a deal and gtfo.

tysonzni 9y ago

tldr; At the macro (city-wide) level, renters tend to be more supportive of development. But wrt development in their own neighborhood, renters in high-rent cities exhibit NIMBY-ism towards market-rate housing (associated with gentrification). Interesting that they don't mind more affordable housing, which suggests that their concern is not simply economic but rather involving risk-aversion, fear of lesser quality of life, and gentrification.